On Thursday, February 14, 2013, the U.S. Department of Defense (“DoD”) released a proposed rule that reforms the method with which hospital inpatient claims are reimbursed under TRICARE/CHAMPUS (“TRICARE”). The proposed rule aims to make TRICARE reimbursement consistent with Medicare’s and other payers’ methods of pricing inpatient claims.

Unless a hospital is exempt by regulation, all hospitals are subject to TRICARE’s DRG-based payment system. Currently, TRICARE reimburses for inpatient claims using the DRG rates and weights in effect on the date of admission. The proposed rule modifies TRICARE reimbursement by using the DRG rates and weights in effect on the beneficiary’s date of discharge.

DoD expects the proposed rule to have the most direct impact on claims that span Fiscal Years (FY) because the DRG rates and weights are updated every FY using the previous year’s TRICARE claims data. For example, if a patient is admitted on September 27, 2013, (FY 2013) and is discharged on October 6, 2013, (FY 2014) reimbursement is calculated using rates and weights in effect on September 27, 2013, (FY 2013), rather than those in effect on October 6, 2013, (FY 2014).

The proposed rule provides more consistency to healthcare providers regarding reimbursement by modifying the way TRICARE calculates payments for inpatient hospital claims to a method widely considered the industry standard.

Interested parties may submit comments to DoD regarding the proposed rule until April 15, 2013.

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